Ford Motor Company is investing $500 million dollars into Rivian, a Michigan-based electric vehicle (EV) startup and will use the company’s unique battery architecture to develop a yet unnamed vehicle. For Ford, it’s an additional investment into electrification on top of the $11-billion dollars its spending to build a comprehensive EV product portfolio. The announcement is another sign that automakers are betting heavily on EVs as their path toward the future, despite the small numbers of electrified vehicles on the road today.
Last November, Rivian, founded in 2009 by engineer RJ Scaringe, showed off a battery-powered pickup truck and SUV at the Los Angeles Auto Show. In February, Amazon announced a $700-million dollar investment in Rivian to develop an electric delivery vehicle. What captures investors’ attention is Rivian’s unique skateboard-like platform that creates flexibility for additional cargo space—something coveted by fleet owners. Some analysts pinpoint Rivian as the latest viable threat to Tesla—the company that has led the charge in EVs but reported heavy first quarter losses yesterday. Tesla also announced earlier this week that the Model X will get a refreshed powertrain, and a bump up to 320 miles of range. Rivian claims it 2020 SUV, the R1S, and pickup truck, the R1T, will have a 400-mile range.
“This is exciting for us. We’ve gotten to know their team and RJ Scaringe, Rivian’s founder and CEO,” said Ford spokesperson Jennifer Flake. “Really this is about accelerating our efforts to create a more sustainable future. It’s a way for us for us to go faster, to learn from each other and offer consumers more choices in the EV space.”
Ford is already developing an electrified Mustang and a battery-powered version of the F150, the best-selling vehicle in the US. Ford declined to name the product it will build with Rivian.
“Ford has promised a portfolio of electric vehicles, including a pickup truck, as well as other models,” said Michelle Krebs, an executive analyst at Autotrader. “Rivian has a well-developed, innovative approach to electrifying trucks that is ready to go. Rivian has the benefit of Ford’s leadership position in the truck market — Ford has something like a 70% loyalty rate in trucks — with its wide distribution network and raft of potential customers, most importantly commercial fleet customers.”
In addition to Rivian’s tech, the nimble aspect of a young company has value to Ford, a legacy automaker striving to prove to investors it can adapt to a changing business landscape. “They don’t have the same buy-in or biases on processes as a 116-year old company,” Flake said. Ford invested $1 billion dollars in the self-driving startup Argo overtwo years ago. In a sign of a further shifting playing field, VW and Ford announced earlier this year they are in talks to partner on autonomous driving efforts with potential VW investment into Argo.
“I don’t see this as a risky move at all. For Ford, $500 million isn’t that huge a bet and they are placing other ones, like with VW,” Krebs said. “If the partnership proceeds harmoniously—and that’s no guarantee as we have seen in this industry in the past—it should produce benefits for both companies.”